IDC slashes 2009 global IT projections

The US is a drag, man

Blame the financial meltdown. And blame the United States. The market researchers at IDC this morning put out revised projections for global IT spending in 2009, and they now say that global IT spending in 2009 will grow at only 2.6 per cent. That's down from an earlier projection of 5.9 per cent growth in year-over-year spending, a projection that came out in August, when the economies of the world were jittery and skittish, not heading towards recession.

The August projection pegged IT spending growth - which includes spending on hardware, software, and services - in the United States at growing at a much less enthusiastic 4.2 per cent, but this has now been slashed to 0.9 per cent growth in 2009.

The "IT is more immune" mantra is coming out of the gurus at IDC, much as it is being heard from other prognosticators and oracles in the IT sector. It is hard to say whether this is wishful thinking or based on real plans at real companies. But it is probably safe to say that companies themselves are unsure of future business conditions, so the error bars on whatever they do tell researchers such as IDC and Gartner have to be pretty large. A collapsed, average percentage modeled for the entire IT industry doesn't show the error bars.

"Although all the economic forecasts went from up slightly to down drastically in a matter of days, the good news is that IT is in a better position than ever to resist the downward pull of a slowing economy," explained John Gantz, chief research officer at IDC, in a statement accompanying the announcement of the IT spending projections for next year. "Technology is already deeply embedded in many mission-critical operations and remains critical to achieving further efficiency and productivity gains. As a result, IDC expects worldwide IT spending will continue to grow in 2009, albeit at a slower pace."

IDC says that IT spending growth with "hover around 1 per cent" in Japan, Western Europe, and the United States. And while Central and Eastern Europe, Latin America, and the Middle East and Africa are expected to "experience healthy growth," the numbers will be lower than the double-digit numbers in the August forecast from IDC.

Ominously for server and network equipment makers, IDC is projecting that sales for hardware (excepting storage) will decline in 2009. Software and services sales are expected to have "solid growth" next year. Solid probably meaning a lot lower number than it used to mean. (IDC was not specific, and if you want specifics, you have to shell out $2,000 for an eight-page report called Economic Crisis Response: Worldwide IT Spending 2008-2012 Forecast Update.)

By the way, these numbers are based on a most likely case scenario. IDC's economists have a "downside scenario" which assumes that global gross domestic product grows by only 0.3 per cent in 2009, instead of the 1.8 per cent in the likely case scenario. Such a scenario, says IDC, would result in the worst GDP increase since World War II. Just to give you some perspective. Anyway, if we go there, global IT spending flatlines, with only a 0.1 per cent increase in 2009 and IT spending in the United States, Western Europe, and Japan go south.

In mid-October, the prognosticators at Gartner cut their global IT spending projections, from 5.8 per cent to 2.3 per cent. Gartner actually puts a number on the IT spend, however: $3.5tr. And that includes telecommunications as well as hardware, software, and services for IT. Gartner was projecting flat spending for IT services, with telecom up 3.9 per cent, software up 8.6 per cent, and hardware down 4 per cent. Gartner expects 0.5 per cent growth in IT spending in North America, 0.8 per cent in Western Europe and only 8.3 per cent in Asia/Pacific.

IDC's wizards want to cheer us up, though. Looking at spending on a longer term, the company is now projecting that IT spending will be up 6 per cent in 2012. However, for 2009 through 2012 inclusive, IDC notes that diminished economic prospects will remove $300bn in IT expenditures over the next four years. And this is not, by the way, for the downside scenario. This is for the most likely scenario.

"Although the revised forecast and the downside scenario both reflect a grim outlook for global economic growth over the next several years, IT spending actually fares well when compared to the previous downturn after the events of September 11, 2001," said Stephen Minton, vice president of worldwide IT markets and strategies at IDC in the same statement. "Companies currently don't have the asset and spending 'overhang' that enabled them to put off purchases after Y2K and the dot-com bubble. As a result, there will be greater pressure for them to continue making IT investments in order to stay competitive."